Does Washington, DC Tax Social Security and Retirement Income?

The District does not tax Social Security benefits

District law excludes from gross income the Social Security and tier 1 Railroad Retirement benefits that are taxable under section 86 of the Internal Revenue Code. There is no income limit and no age test, so the exclusion is the same for a retiree with $40,000 of income and one with $400,000. (D.C. Code 47-1803.02, Gross income and exclusions: Social Security, pension and survivor benefit provisions)

The return starts from federal adjusted gross income, which includes the federally taxable part of benefits, and takes it back out. On the 2025 Form D-40 the amount from the federal return is entered on line 10, “Taxable amount of social security and tier 1 railroad retirement”, as a subtraction from income. The example couple on this page has $46,750 of benefits taxed on the federal return and none taxed by the District. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Pensions and military retired pay are taxed in full

The District has no general exclusion for pension or annuity income. A private employer pension, a federal civil service annuity, a District government pension and military retired pay all arrive in federal adjusted gross income and stay in District income, taxed at the regular rates. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

There used to be a small break. People aged 62 or older could exclude up to $3,000 of pension, military retired pay or annuity income received from the District or the federal government. The statute now limits that exclusion to taxable years beginning before January 1, 2015, so it has not been available for more than a decade. (D.C. Code 47-1803.02, Gross income and exclusions: Social Security, pension and survivor benefit provisions)

One related exclusion survives. Survivor benefits received from the District or the federal government by a person who is 62 or older at the end of the year are subtracted on line 12 of the D-40. Social Security survivor benefits are not entered there; they are covered by the Social Security subtraction on line 10. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

IRA and 401(k) withdrawals and Roth conversions are taxed as ordinary income

Taxable distributions from a traditional IRA, 401(k), 403(b) or similar plan are part of federal adjusted gross income, the first income line of the D-40, and no District subtraction removes them. They are taxed at 4% to 10.75% along with everything else. Schedule I, the District’s list of subtractions, has no line for retirement account distributions. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

A Roth conversion is taxed in the year it is made, because the converted amount is in federal AGI for that year. Qualified Roth withdrawals are not in federal AGI and are not taxed. A large conversion can carry income into the 8.5% bracket, which starts at $60,000 of taxable income, or the 9.25% bracket at $250,000. (DC Office of Tax and Revenue, 2026 D-40ES Estimated Payment for Individual Income Tax (Rev. 03/2026): worksheet and tax rate table)

A conversion also raises the federal modified adjusted gross income that controls the $6,000 senior deduction, which shrinks by 6 cents for each dollar over $75,000 (single) or $150,000 (joint). Because the District now allows that deduction, a conversion that removes it federally removes it on the District return as well. (26 U.S.C. 151(d)(5)(C), Deduction for seniors ($6,000 per qualified individual, income limitation, joint return requirement))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed at ordinary rates

The District applies one rate table to taxable income and has no lower rate for long-term capital gains or qualified dividends. A gain is taxed at the same 4% to 10.75% rates as a pension, so a large one-time gain, such as the sale of a second home or a concentrated stock position, can be taxed at 8.5% or more. (DC Office of Tax and Revenue, 2026 D-40ES Estimated Payment for Individual Income Tax (Rev. 03/2026): worksheet and tax rate table)

Interest and dividends from U.S. Treasury bonds and other federal obligations are subtracted on Schedule I, Calculation B, line 1. Municipal bonds changed with the 2025 return: interest on the obligations of other states and their political subdivisions is now included in District income, while interest on obligations of the District, a U.S. territory, DC Water, the Washington Metropolitan Area Transit Authority and the DC Housing Finance Agency remains exempt. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

The same table applies to every filing status: 4% on the first $10,000 of taxable income, 6% from $10,000 to $40,000, 6.5% to $60,000, 8.5% to $250,000, 9.25% to $500,000, 9.75% to $1 million and 10.75% above. The 2026 estimated tax booklet carries that table unchanged. (DC Office of Tax and Revenue, 2026 D-40ES Estimated Payment for Individual Income Tax (Rev. 03/2026): worksheet and tax rate table)

Since 2025 the District has set its own basic standard deduction instead of using the federal one: $15,000 for single filers and married people filing separately, $22,500 for heads of household and $30,000 for joint filers, for couples filing separately on the same return and for surviving spouses. For 2026 through 2029 the statute raises those amounts by a cost-of-living adjustment that compares the consumer price index for the preceding calendar year with the index for a base year of 2025. For tax year 2026 the preceding year and the base year are both 2025, so the adjustment is nil and the 2026 figures equal the 2025 amounts; the first increase comes in 2027. The Office of Tax and Revenue had not published the 2026 D-40 on the review date. (D.C. Code 47-1801.04, General definitions: basic standard deduction (3A), cost-of-living adjustment (11) and standard deduction (44))

The additional standard deduction for age still follows the federal amount. The 2026 estimated tax worksheet gives $1,650 for each spouse aged 65 or older, or blind, and $2,050 for an unmarried person. That worksheet was printed in March 2026, before the basic amounts above were enacted in their final form, and shows a basic deduction of $16,100 or $32,200, the federal figures. (DC Office of Tax and Revenue, 2026 D-40ES Estimated Payment for Individual Income Tax (Rev. 03/2026): worksheet and tax rate table)

From tax year 2026 the District also allows the federal senior deduction, listed among the additional deductions from gross income in its new section on individual deductions. A filer who takes the standard deduction on the federal return must take it on the District return, and one who itemizes federally must itemize here, without any deduction for state and local income tax. (D.C. Code 47-1803.04, Individual, estate and trust deductions: standard and itemized deductions, senior deduction from 2026)

The amount of the senior deduction is set by federal law: $6,000 for each person who is 65 by the end of the year, reduced by 6% of modified adjusted gross income over $75,000, or $150,000 on a joint return, and available to married people only if they file jointly. It ends after tax year 2028. (26 U.S.C. 151(d)(5)(C), Deduction for seniors ($6,000 per qualified individual, income limitation, joint return requirement))

Married couples can file a joint District return or file separately on the same return, and the instructions tell them to use the status that gives the lower tax. On Schedule S, Calculation J, each spouse reports their own share of income, the couple divide the deduction between them as they wish, and each runs through the rate table from the bottom. The examples on this page price both ways and show the lower, giving each spouse their own pension and IRA income and half of the investment income. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

Social Security and tier 1 Railroad Retirement benefits: fully excluded at any income. (D.C. Code 47-1803.02, Gross income and exclusions: Social Security, pension and survivor benefit provisions)

Additional standard deduction at 65: $2,050 for an unmarried person and $1,650 for each spouse for 2026. (DC Office of Tax and Revenue, 2026 D-40ES Estimated Payment for Individual Income Tax (Rev. 03/2026): worksheet and tax rate table)

Senior deduction: from tax year 2026 the federal deduction of up to $6,000 per person 65 or older is allowed on the District return. It was not allowed for 2025. (D.C. Code 47-1803.04, Individual, estate and trust deductions: standard and itemized deductions, senior deduction from 2026)

Government survivor benefits: benefits paid by the District or federal government to a survivor aged 62 or older are subtracted on line 12 of the D-40. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

Property tax: half off the bill for owners 65 or older under an income limit, a 2% cap on yearly assessment growth for the same owners, and an income tax credit of up to $1,425 with a higher income limit from age 70. (DC Office of Tax and Revenue: Real property tax reliefs, credits and deductions)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Washington, DC's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

Residential real property in the District is taxed at $0.85 per $100 of assessed value. For a home with no more than two dwelling units, assessed value above $2.558 million is taxed at $1.00 per $100. On a $500,000 assessment the tax is $4,250 a year before the homestead deduction and any senior relief. (DC Office of Tax and Revenue: Real property tax rates)

As a comparative figure, the Tax Foundation’s 2026 report, using 2024 Census data, puts the effective rate on owner-occupied homes in the District at 0.60% of value, well under the nominal rate because of the deductions and caps below. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

Relief is layered. The homestead deduction takes $95,100 off the assessed value of an owner-occupied principal residence for real property tax year 2027, worth $808.35. An owner who is 65 or older and under the household income limit then has the remaining tax cut in half, and a 2% cap replaces the general 10% cap on how much the taxable assessment can rise in a year. Each requires an application to the Office of Tax and Revenue. (DC Office of Tax and Revenue: Real property tax reliefs, credits and deductions)

The general sales and use tax rate is 6%. An increase to 7% had been scheduled for October 1, 2026; the fiscal year 2027 budget legislation moved it back a year, and the statute now reads 6.0% before October 1, 2027 and 7.0% from that date. Higher rates apply to particular purchases, including 10.25% on alcohol sold for consumption off the premises and 18% on parking. (D.C. Code 47-2002, Gross sales tax: imposition of tax and rates)

Groceries are outside the tax. The definition of a retail sale leaves out food and drink of the kinds that qualify as eligible foods under the federal food assistance rules, whether or not they are bought with benefits; food prepared for immediate consumption and soft drinks are taxed. (D.C. Code 47-2001, Gross sales tax definitions: retail sale, food and drink)

Medicines, pharmaceuticals and drugs are exempt whether or not they are sold on prescription, which is broader than the prescription-only exemption many states use. Certain medical devices bought for personal use on a physician’s written order are exempt as well. (D.C. Code 47-2005, Gross sales tax exemptions (medicines, pharmaceuticals and drugs))

The District has an estate tax. For decedents dying from January 1 through December 31, 2026 the exclusion, which the law calls the zero bracket amount, is $4,988,400. A taxable estate at or below that figure owes nothing. (DC Office of Tax and Revenue: Notice of October 1, 2025 tax changes (estate tax exclusion for 2026))

Above the zero bracket the estate is taxed at graduated rates on each slice of the taxable estate: 11.2% from $4 million to $5 million, 12% to $6 million, 12.8% to $7 million, 13.6% to $8 million, 14.4% to $9 million, 15.2% to $10 million and 16% above. With a 2026 exclusion just under $5 million, the first dollars taxed pay 11.2%. Where a resident owned real or tangible property outside the District, the tax is reduced in proportion. (D.C. Code 47-3702, Tax on transfer of taxable estate of residents (rates))

A District estate tax return, Form D-76 or D-76EZ, must be filed when the gross estate reaches the filing threshold for the year of death, which was $4,873,200 for 2025, even if no federal estate tax return is required. There is no inheritance tax on deaths today: inheritance tax returns are required only for deaths before April 1, 1987. The return and the tax are due within 10 months of the date of death and are filed electronically; interest runs at 10% a year, compounded daily. (DC Office of Tax and Revenue: DC estate, inheritance and fiduciary tax information)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

For tax year 2025 the District declined to follow several changes in the 2025 federal tax law, including the higher federal standard deduction and the new deductions for tips, overtime, car loan interest and people 65 and older. The 2025 D-40 booklet tells filers they cannot claim those deductions on the District return even if they claimed them federally. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

That changes for 2026. The Fiscal Year 2027 Budget Support Act kept the District’s own standard deduction through tax year 2029 but, beginning in tax year 2026, allows the deductions for qualified tips, overtime, personal car loan interest and the enhanced senior deduction of $6,000. It also makes the repeal of the District’s personal exemption permanent. The federal law schedules those deductions to end after tax year 2028. (DC Office of the Chief Financial Officer, Fiscal Impact Statement: Fiscal Year 2027 Budget Support Act of 2026 (Tax Code Conformity and Clarification; Sales Tax Increase Delay))

The act is permanent law. The Council’s legislative record shows bill B26-0661 as Act A26-0418 and Law L26-0189, effective October 2, 2026. (Council of the District of Columbia, Legislative Information Management System: B26-0661, Fiscal Year 2027 Budget Support Act of 2026)

The general sales tax increase from 6% to 7% was postponed from October 1, 2026 to October 1, 2027 by the same legislation. (D.C. Code 47-2002, Gross sales tax: imposition of tax and rates)

Property tax figures move each year. For real property tax year 2027 the homestead deduction is $95,100 and the household income limit for senior relief is $169,050, tested on 2025 income. The Schedule H credit limits shown on this page are the 2025 figures, the latest published on the review date. (DC Office of Tax and Revenue: Real property tax reliefs, credits and deductions)

A person is a District resident if they are domiciled in the District at any time during the year, or if they maintain a place of abode there for a total of 183 days or more, which makes them a statutory resident. A statutory resident is treated as a full-year resident and reports all income for the year, with a credit for income tax paid to another state. Temporary absences such as vacations, hospital stays and business trips count as days in the District. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

Domicile, once established, is presumed to continue. To change it a person must show physical presence in the new place, an intent to abandon the District domicile and an intent to stay in the new place indefinitely. Someone who establishes or gives up a District domicile during the year files as a part-year resident, reports the income received while domiciled there and prorates the standard deduction and credits by days. (DC Office of Tax and Revenue, 2025 D-40 Individual Income Tax Forms and Instructions: subtractions, filing status, Schedule S Calculation J, Schedule I, residency)

Federal law bars a state, and the District, from taxing the retirement income of someone who is no longer a resident or domiciliary. Pension, 401(k) and IRA payments earned in a Washington career are taxed only where the retiree lives when they are paid. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)